April 14, 2011
The FHA encourages borrowers preparing to apply for an FHA insured mortgage to get credit counseling and/or first time home buyer counseling where appropriate. An informed borrower is better protected in the real estate marketplace; in some cases the FHA actually requires applicants to get counseling to protect the borrower from making poor decisions about certain kinds of loan products.
HECM loans/reverse mortgages are one type of FHA insured mortgage that require counseling in order to get loan approval, due in part to their unique nature compared to other types of loans.
To help FHA loan applicants, the agency refers borrowers to approved counseling agencies. In an age where anyone can set up a storefont and pretend to dispense advice about credit, foreclosure avoidance and buying a home, the FHA’s nationwide network of approved agencies is another layer of protection the conventional borrower doesn’t have access to.
In some cases these agencies may charge a fee for their services. FHA rules state these fees must be reasonable and in accordance with accepted industry practices. A first-time home buyer, for example, may have to pay a small fee. So do people who want FHA Home Equity Conversion Mortgage loans.
But some services are required to be free. FHA borrowers should never have to pay for foreclosure avoidance counseling, and FHA publications warn borrowers not to pay for such counseling from a non-approved agency. There’s no reason to pay a fee for the same information you can get for free through an FHA-referred counselor.
Borrowers can get in touch with the FHA directly or use the agency’s online locator tool to find a counselor nearby. Searches can be conducted for a wide range of services, but users can also use the tool to find a specific type of FHA approved counseling such as reverse mortgage or HECM loan counseling or foreclosure avoidance.
This tool allows you to search by state, but it’s important to note that not all counseling services are available in all cities–borrowers may need to do a bit of travel to reach the closest office of an FHA approved or referred agency.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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